Jeff Bobo

SURGOINSVILLE — Surgoinsville residents have been wondering for a year and a half what would come of an investigation by the office of the Tennessee Comptroller of the Treasury into alleged wrongdoing at City Hall under the previous administration.

They got their answer Monday with the release of a report on the investigation findings, with former Vice Mayor Charles “Otis” Lawson, who served from 2002 to 2006, at the center of allegations involving misappropriations, unlawful conflicts of interest, and a kickback.

Current Mayor Johnny Greer, who took office following the 2006 election, said Monday he was saddened and disappointed but not surprised by the findings. He called it a black eye for the town.

Shortly after Greer took office he noticed items missing from the town inventory, especially military surplus items, and requested an audit. That audit led to the comptroller’s investigation.

There are four main allegations presented against Lawson in the comptroller’s report:

•An unlawful conflict of interest. The report states that on Aug. 9, 2004, Lawson asked the town attorney whether it would be a conflict of interest for a business he co-owned, A&L Contractors, to service town vehicles. According to records, Lawson was told that it would be a conflict of interest.

“Subsequent to receiving that legal advice, during the period of Jan. 11, 2006, through Aug. 3, 2006, the town of Surgoinsville paid A&L Contractors $4,590 for work done on town vehicles,” the report states.

Lawson is also accused of using his position as vice mayor to direct public works employees to take town vehicles to A&L Contractors for repairs and maintenance.

•Kickback required and received by former vice mayor. The report alleges that Lawson required and received a kickback on a $170 town check for vehicle repair payable to “Randy’s Fabricating,” which ironically turned out to be a company allegedly fabricated by Lawson.

“In an interview of the purported owner of Randy’s Fabricating, he stated it was Mr. Lawson’s idea to create the fictional company and have him submit the invoice since it would be a conflict of interest for Mr. Lawson to submit an invoice for the work,” the report states.

Lawson allegedly second-endorsed the check, and according to the report, paid the purported owner of Randy’s Fabricating $20, allegedly keeping the remainder for himself.

•Engine analyzer and truck hitch acquired through military surplus program apparently misappropriated by Lawson.

Lawson reportedly told investigators that the military surplus engine analyzer valued at $7,248 and truck hitch valued at $300 were dumped in his yard by public works employees without his permission. Public works employees denied dumping the items in Lawson’s yard. Available documentation indicates both items were picked up on the town’s behalf by Lawson and former Police Chief Dale Scalf on a trip to Jacksonville, Fla., and Scalf reportedly told investigators he had personally observed both items later located at A&L Contractors.

•Lawson instructed public works employees to remove traffic signs in apparent furtherance of his own interests.

The comptroller’s report alleges that Lawson ordered town employees to remove signs prohibiting vehicles with a weight rating more than 35,000 pounds from traveling on roads within town with the exception of Phipps Bend Road, Route 346 and Highway 11-W.

Lawson claimed that the ordinance enacting the weight restrictions had never been approved on second reading. The investigation revealed, however, that the ordinance had been approved on its final reading, and while the town recorder was on vacation around Christmas 2004 the ordinance was removed from the ordinance book.

During that time the ordinance book was allegedly in the possession of Lawson and former Mayor Hanes Cooper, who had both voted against the ordinance.

“Upon her return from vacation the recorder noticed the ordinance was missing and reprinted and replaced it, over the alleged objections of the former mayor,” the report states.

Lawson owns a trucking company with a base of operations in Surgoinsville.

Third Judicial District Attorney General Berkeley Bell said Monday he hasn’t fully studied allegations against Lawson, but he will be discussing what action to take with the comptroller’s office.

“This looks like a matter that, after review, will be submitted to the grand jury for a determination,” Bell said.

Chad Jackson, who serves as staff attorney for the Tennessee Comptroller of the Treasury, said he has no timeline at this point with regard to pursuing charges against Lawson. He said his main focus at this time is on a separate investigation involving Cooper’s alleged wrongdoing with the Surgoinsville Water Utility.

“General Bell and myself have not discussed the town issues yet, so it’s kind of still up in the air,” Jackson told the Times-News Monday.

Greer told the Times-News Monday it is common procedure for any incoming mayor to ask for an audit.

“I did that, and it has revealed quite a bit,” Greer said. “It’s something that we’re not proud of down here, but maybe after this we can move forward as a town and try to not let these mistakes happen again.”

Aside from the specific allegations involving Lawson, the comptroller’s report also included six other negative findings/allegations including:

•Military surplus property totaling at least $137,104 that had been acquired by Surgoinsville between Jan. 1 2006, and June 30, 2007, is still missing.

According to the report, $13,682 worth of items were found stored at A&L Contractors, “being stored in accordance with an agreement between Cooper and Lawson.”

•Military surplus property valued at $272,643 used for purposes other than law enforcement and by governmental entities other than the town. To obtain the military surplus property Scalf was required to sign a statement agreeing that the property was for local law enforcement activities only, but several items were found in possession of the Surgoinsville Utility District and Hawkins County Sheriff’s Office.

Other items acquired by Scalf “defy reason,” according to the report, including 31 bayonets, 22 digital cameras and camcorders, 50 jackets, and 52 pairs of pants. The Surgoinsville Police Department had three officers when Scalf was chief.

•An oil burning furnace gifted to Lawson without being declared surplus or sold at auction.

•A contract with former town attorney Crystal Goan being backdated and entered into without board approval.

•A contract with Brothers Repair apparently backdated by Lawson and entered into without board approval.

•Deliberate circumvention of bid process by Cooper by issuing three checks totaling $2,495 — $5 less than the town’s threshold for required bids — for a total of $7,485 to L&W Paving for work performed on the same paving project.